While stores take a leaf out of the typical e-commerce strategy of cashbacks, online retailers have substantially increased discounts for customers using cards.Richa Maheshwari&Rasul Bailay | ET Bureau | November 21, 2016, 08:16 IST

Those who thought the big discounts and sales had ended with Diwali are in for a surprise: demonetisation has resulted in retailers offering out-of-season rebates and incentives to lure customers back.

Fashion brands are going the e-commerce way after the invalidation of Rs 500 and Rs 1,000 notes, offering promotions, cashbacks and discounts during the full-price season to reverse a trend of dwindling sales and fewer footfalls and save the October-December quarter from becoming a washout.

"Post Diwali, we don’t run promotions. But when suddenly 40% of the customer base disappears, then what do we do?" asked Kavindra Mishra, managing director of Pepe Jeans.

While stores take a leaf out of the typical e-commerce strategy of cashbacks, online retailers have substantially increased discounts for customers using cards. Myntra is offering an additional 25% discount on purchases above Rs 1,299 paid through debit and credit cards and Jabong has the same benefit for online payments of Rs 999 and more.

"The discount is being offered to encourage people to use cards," a spokesperson for Bengaluru-based Myntra said in an emailed response. "The offer was started on November 9 and has seen a good response with prepaid transactions increasing by 30%."

While Tommy Hilfiger and Benetton are offering promotions, Superdry and Marks & Spencer are trying to draw customers with discounts and cashbacks. Pepe Jeans has gone a step ahead by giving additional discounts on card transactions. Marks & Spencer has an additional 10% cashback on card payments and Pepe Jeans offers 5% off.

Yogeshwar Sharma, executive director at Select CityWalk Mall in New Delhi, said cards are used for almost 98% of the purchases at the shopping centre, although he did not say if footfalls and sales have been affected in recent weeks.

Retailers said the demonetisation of Rs 500 and Rs 1,000 currency notes 10 days after Diwali came as a blow, especially when they typically sell products at full prices. Pepe said it started on-the-spot cash incentives for in-store staff for higher conversions and this seems to have arrested the decline in sales to 26% from 50% a week earlier. Superdry said its promotions helped it to stem the sales drop to about 20% from 40-50% earlier.

"This situation is going to be there till the end of this month. However, we are re-analysing the consumption pattern every week," said Manu Sharma, business head of Superdry at Reliance Brands.

Not all brands are resorting to discounts — some are offering customers other services and incentives. Sports brand Puma is accepting cheques from loyal customers. However, such measures appear to have a limited impact. Overall, business hasn’t improved as fewer customers are spending money after the high-denomination notes were scrapped.

"These steps (discounting and cashback) are to overcome the customer’s negative sentiment. But it hasn’t helped. Between last week’s footfalls and sales numbers and now, there isn’t much change," said Suresh Singaravelu, executive director of retail at Prestige Estates Projects, which owns South India Forum malls and Bengaluru’s luxury mall UB City.

Last week, he told ET that footfalls at the Prestige malls had dropped 20% on the weekend while sales at the food courts fell 40%, fashion categories sales declined 25% and hypermarket sales were 30% lower.

"Business is still down by 50-70%. It has not picked up," said Suhail Yusuff, secretary of the Brigade Road Shops and Establishments’ Association in Bengaluru, which is home to national and international brands such as Arrow, Nike, Puma, Adidas and Vero Moda. The sudden, major dent in consumer sentiment has resulted in inventory piling up with retailers and they are now trying to liquidate the stockpiles by advancing the December end-season sale.

"The end-of-season sale period starts from the last week of December, but this year almost all brands are planning to bring it forward to the first or second week of December," said a top executive of a foreign footwear brand.

"Nobody wants to spend cash and the inventories are piling up. Hence, we are also planning to advance our sales by a week," he added.